Officials consider plan for convention center hotel

By Nancy Sarnoff |
December 14, 2011

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A proposal to bring a new convention center hotel with at least 1,000 rooms to downtown is back on the drawing board.

Houston First, which runs the George R. Brown Convention Center, Hilton Americas-Houston and other city-owned buildings, has hired a consulting firm to help craft a formal request to developers who could assemble a team and deploy the financial resources to build the hotel. The developer would be responsible for buying land, designing, building and operating the property.

The hotel would be part of a larger mixed-use development that could include commercial, residential and retail space, all within walking distance of the convention center.

Some of the project's details are outlined in a document that Houston First used to hire a consulting firm. Georgia-based Strategic Advisory Group was recently chosen as that firm.

The hotel would contain at least 120,000 square feet of meeting space and parking. The design would have to contain a skywalk or a tunnel that connects the hotel to the convention center.

While the developer would have sole responsibility for financing all aspects of the hotel project, Houston First would help it obtain hotel occupancy and sales tax rebates from the city and state, according to the document.

"We intend it to be a primarily private development," said Dawn Ullrich, president and CEO of Houston First, which would have final say on the design and development schedule of the hotel.

The project would be built on several parcels of land within 1,000 feet of the convention center.

Those parcels were not identified, but the hotel could be built on a parcel that mirrors the Hilton Americas, across Discovery Green park.

In 2008, city officials first began discussing a second convention center hotel on that site. The addition of some 1,000 new rooms, they said, would help the city attract larger conventions.

That year, the city put its 1,200-room Hilton Americas on the market, hoping that the sale of the property could pave the way for a new hotel to be built on the site across the park.

That plan, however, was ultimately derailed by the soon-to-follow economic crisis.

Despite the officials' enthusiasm to boost downtown meeting business, hotel consultant Bruce Walker is not convinced another large convention center hotel can be built in downtown Houston.

In downtown's 77002 ZIP code, he said, occupancy and room revenues are too low to justify such the development of such a large property.

And the cost to build a full-service hotel, which he estimates to be around $400,000 a room, is too high for the proposed project to be profitable.

"Those numbers don't even come close to working," he said.

In the year ending Sept. 30, hotel occupancy downtown was 61.7 percent, according to Walker, president of San Antonio-based Source Strategies, which did not bid on the consulting job.